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TMI Blog2012 (4) TMI 361X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- from younger sister of the assessee - It appears from reading of section 68 of the Act that whenever a sum is found credited in the books of account of the assessee then, irrespective of the colour or the nature of the sum received which is sought to be given by the assessee, the Income-tax Officer has the jurisdiction to enquire from the assessee the nature and source of the said amount - Held that: The assessee has also failed to furnish the complete circle of all these transactions that wherefrom original money came to the account of Smt. Anjali Consul which was invested in units as well as in banks in the form of fixed deposits and others - Decided against the assessee - IT Appeal Nos. 39 & 49 (Agr.) of 2011 - - - Dated:- 4-4-2012 - BHAVNESH SAINI, A.L. GEHLOT, JJ. ORDER A.L. Gehlot, Accountant Member These are cross appeals filed by the Revenue and assessee against the order dated 16.11.2010 passed by the Ld. CIT(A), Ghaziabad for the Assessment Year 2006-07. ITA No.49/Agr/2011 by the Revenue for A.Y. 2006-07 2. The sole ground raised in the appeal by the Revenue is in respect of deletion of addition of Rs. 18,24,950/- on account of loan to M/s. So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct the transaction with the party was on account of sale of ghee which was sold in earlier year and there was an outstanding balance of sale consideration. The amount received during the year under consideration was against outstanding sale consideration. 4. We have heard the ld. Representatives of the parties and records perused. The admitted facts of the issue is that there was opening balance in the account of Sona Traders for a credit balance as evident from the copies of account reproduced by the Assessing Officer in his order at page nos.4 5. From the books of accounts of Sona Traders as well as of the assessee the Assessing Officer himself admitted at page no.5 of his order that both the parties are showing that there was opening balance which was squared up during the year. It appears from the perusal of record that entire confusion arisen on account of auditor's report who has reported in Annexure-B of his report that this amount was loan and deposit. The assessee vide written submission before the CIT(A), of which copy appears at page no.5, submitted that there was mistake on the part of the Auditor and a clarification letter from the Auditor was furnished before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- could not be treated as explained credit entry. The assessee did not furnish any explanation. The Assessing Officer also noticed that Smt. Anjali Consul is also assessed in his ward and on perusal of Income Tax return for the Assessment Year 2006-07, it was noticed that the source of income was only limited i.e. the interest income of Rs. 36,564/- on FDRs. There was no other source of income. The Assessing Officer, therefore, held that the assessee failed to prove the creditworthiness of the amount of Rs. 15,40,000/-. The Assessing Officer made addition of Rs. 15,40,000/-under section 68 of the Act as the assessee has failed to explain the credit entry appearing in the capital account. Before the CIT(A) it was claimed by the assessee that the amount credited in the capital account was the amount of gift received from real sister Smt. Anjali Consul who is resident of Singapore. The CIT(A) confirmed the addition as under :- "7.3 Ground No.3 against addition of Rs. 15,40,000/- In respect of ground no.3, I find that the appellant's case is on a weak footing. During appellate proceedings, the assessee is claiming that this was gift received from his real sister, Smt. Anjali C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asonable cause for not furnishing the explanation or evidence does not arise. Ld. Authorised Representative submitted in respect of observation of CIT(A) that the assessee as well as Smt. Anjali Consul did not show the gift in the return of income. Ld. Authorised Representative submitted that there is no such column in the Saral return form. Law does not say that if gift is not shown in the return, it shall be added in the income. Ld. Authorised Representative submitted that creditor was not examined neither by the Assessing Officer nor by CIT(A). Ld. Authorised Representative further submitted that the Assessing Officer could know that the donor also assessed by him that too when no explanation was alleged to be given by the assessee if the Assessing Officer could make so much efforts, why he did not make any effort to call the assessee and ascertain the true facts. Ld. Authorised Representative referred various pages of Paper Book. Page no.18 is copy of confirmation of gift given by Smt. Anjali Consul and accepted by the assessee dated 15.12.2005, page nos.15 16 is copy of Passport of Smt. Anjali Consul, page no.14 is PAN Card of Smt. Anjali Consul, page no.13 is computation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and being treated as own money/capital. Normally such credit entry in capital account can be made only of the transition which has been processed through the provisions of the Income Tax Act. It appears from reading of section 68 of the Act that whenever a sum is found credited in the books of account of the assessee then, irrespective of the colour or the nature of the sum received which is sought to be given by the assessee, the Income-tax Officer has the jurisdiction to enquire from the assessee the nature and source of the said amount. When an explanation in regard thereto is given by the assessee then, it is for the Income-tax Officer to be satisfied whether the said explanation is correct or not. It is in this regard that enquiries are usually made in order to find out as to whether, firstly the persons from whom money is alleged to have been received actually existed or not. Secondly depending upon the facts of each case, the Income-tax Officer may even be justified in trying to ascertain the source of the depositor, assuming he is identified, in order to determine whether that depositor is a mere name lender or not. Be that as it may, it is clear that the Income-tax Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r:- "It is true that an apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents." 11.2 The Apex Court in the case of Commissioner of Income-tax v. P Mohanakala 291 ITR 278 (SC) has laid down certain guidelines in respect of the genuineness of a gift. In this case following questions have been answered by the High Court in favor of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved by A. Srin ivasan and others who are all his family members. Each one of them is an individual assessee. All the assessees were summoned and their statements have been recorded by the Assessing Officer. Srinivasan who is the key person in his statement said that he knew Sampathkumar for the last 20 years and he had been helping Sampathkumar prior to 1985 by paying Rs. 100 to 200 every month as he had no source of income to get himself educated. Sampathkumar in his own statement stated that he was in Indonesia up to the year 1992 and employed as an engineer. Thereafter, he shifted to England and started consultancy profession there. Later in the end of the year 1994-95, he joined New Century Machinery Ltd., Cheshire, SK 16 4xS and became its director in 1996. It is in his statement that he is paying taxes in England from his income earned in England. As far as his Indian income is concerned, he stated that he filed the returns for the assessment years 1996-97 and 1997-98 before the Income-tax Officer, Ward 1(4), CBE only on October 23, 1997. His investment in Indian companies according to him will be around Rs. 5 crores and made out of his income earned in the foreign countries. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd credited in the books to be treated as a receipt of an income nature. The burden in this regard was on the assessees. No such attempt has been made before any authority. All the decisions cited and referred to hereinabove are required to be appreciated and understood in the light of the law declared by this court in Sumati Dayal [1995] Supp 2 SCC 453. Whether the High Court was justified in interfering with the concurrent finding of fact arrived at by all the authorities including the Tribunal? The Assessing Officer found that all the so-called gifts came from Ariavan Thotan and Suprotoman. The assessees did not declare that they are the aliases of Sampathkumar. It is only an afterthought they have come forward with the said plea. The Assessing Officer also found that the gifts were not real in nature. Various surroundings circumstances have been relied upon by the Assessing Officer to reject the explanation offered by the assessees. The Commissioner of Appeals confirmed the findings and conclusion drawn by the Assessing Officer. The Tribunal speaking though its Senior Vice President concurred with the findings of fact. The findings in our considered opinion are based on the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r situation in CIT v. P. Mohanakala [2007] 291 ITR 278. While dealing with section 68 of the Act, the Supreme Court held that : ( i ) There has to be a credit of the amount in the books maintained by the assessee. ( ii ) Such credit has to be of a sum during the previous year. ( iii ) The assessee offers no explanation about the nature and source of such credit found in the books, or if the assessee offers an explanation then, in the opinion of the Assessing Officer, it is not satisfactory. It is only then that the sum so credited may be charged to income-tax as the income of an assessee. The Supreme Court considered the expression "the assessee offers no explanation" and observed that what it means is that the assessee offers no proper, reasonable and acceptable explanation in the opinion of the Assessing Officer, formed objectively with reference to the material available on record." 11.7 Punjab Haryana High Court in the case of Yash Pal Goel v. CIT (A), 310 ITR 75 (P H) under the circumstances held that gift transaction was not genuine. The Court also observed as under:- "The so-called gift set up by the appellant was not bona fide transaction. The u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed. The CIT(A) surprised to note that even such a simple explanation that the amount was gifted by the assessee's sister was not pointed out to the Assessing Officer nor such explanation was furnished before the Assessing Officer. Rule 10 of ITAT rules provides that where a fact which cannot be borne out by, or is contrary to, the record is alleged, it shall be stated clearly and concisely and supported by a duly sworn affidavit. The assessee did not file such sworn affidavit stating that the Assessing Officer has recorded contrary facts in his order. Not only this, but it is also fact that the assessee failed to furnish any evidence to support that these documents were filed before the Assessing Officer. However, in the interest of justice, whatever papers were filed in Paper Book and pointed out by the Ld. Authorised Representative, if we consider it on merit, on perusal of copy of statement of Syndicate Bank account of Aligarh Main Branch which has been placed at page no.8 of assessee's Paper Book, it has been noticed that credit balance in the said account up to 09.07.2005 was Rs. 13,582/-. On 15.10.2005, it is mentioned as close Trf-VCC 42493 Rs. 9,06,167/-. Next entry is dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm of fixed deposits and others. Unless the assessee furnishes the complete chain of funds or money that the money received by Smt. Anjali Consul, NRI, was in accordance with Reserve Bank of India procedures, Smt. Anjali Consul being NRI and strict rules are to be complied with for sending money to India by any NRI or others, the assessee has failed to point out any single paper that the original investment made by Smt. Anjali Consul in the units and F.D. in banks were came from out of India in accordance with rules and regulations framed by the Reserve Bank of India. In absence of such material, it cannot be held that the original amount invested belongs to Smt. Anjali Consul and in fact the amount gifted was from out of India. Even otherwise, considering the fact that this may be the investment in units and FD out of income earned in India, such exemption or explanation is also not acceptable. The Revenue Authorities has noted that the donor Smt. Anjali Consul is filing return showing meager amount of income. For example, in Assessment Year 2006-07, it was Rs. 36,564/- only. Thus, the gift of Rs.15,40,000/- cannot be said to be given by such meager income. Can it believable fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is capacity to make the gift, but he must also establish that the amount received by him was in fact a gift. The assessee failed to discharge his duty in this regards. In the case of CIT v. P. Mohanakala [2007] 291 ITR 278, the Supreme Court considered the expression "the assessee offers no explanation" and observed that what it means is that the assessee offers no proper, reasonable and acceptable explanation in the opinion of the Assessing Officer, formed objectively with reference to the material available on record. We find that the assessee has failed to furnish explanation as required in this regards. Here it is to relevant to refer observation of Punjab Haryana High Court in the case of Yash Pal Goel v. CIT (A), 310 ITR 75 (P H) where the court observed that the so-called gift set up by the appellant was not bona fide transaction. The unscrupulous use every gimmick to avoid paying income-tax. If the State exchequer is made the target of deceit and the revenue comes down, the development of the country will be a casualty. It is reprehensible that same citizens spend on litigation and unnecessarily bring matters before courts than to pay tax on their income. The tende ..... X X X X Extracts X X X X X X X X Extracts X X X X
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